Stealth Mercenary Team Boosts Fortune 500 Companies

“You can’t replace three expert engineers with three warm bodies,” he says. The traditional outsourcing model wouldn’t save money for most companies, he stresses, because design engineers with substantially less experience in outsourcing outfits often miss deadlines. In the world where “a window of success is rapidly shrinking,” even a three-month delay in product launch could cost a company dearly, Bagalkotkar explains.

Turning the conventional outsourcing wisdom on its head, Synapse Design goes to tier-one chip companies and system vendors, pitching its services to help clients “expand” their business, according to him.

The company’s website bluntly states:

Synapse Design target customers are companies with $1 billion in revenue, and we enable them to meet their technical & resource challenges to build the next generation products.

Bagalkotkar explains that at a time of economic crisis, clients are often forced to shrink their workforces and product portfolios. “But what they can’t afford to cut are their flashy key product lines.” That’s where Synapse Design comes in. “Our mission is to help them design their next-generation SoCs with cutting edge technologies,” not low-end products destined to become obsolete.

From fabless to design-less The world has already seen a number of design service companies pop up. Some have stayed and others have already gone. These outfits range from small for-hire design houses to larger design service companies like eSilicon and VeriSilicon. Some chip vendors have gone not only fabless, but also design-less. Riding this wave are design service companies.

So, how’s Synapse Design different? Bagalkotkar says that he doesn’t see any of the existing design service companies as competitors. He noted that others tend to work with second or third-tier chip companies, and the focus of their service is often geographically limited.

Further, Synapse Design’s COO Gautam pointed out that the biggest difference lies in the scale and breadth of the experience Synapse Design has accumulated.

“Compare what we do with many of the largest chip and system companies we work for,” says Gautam. Any given large chip or system companies “will generate fewer than a handful of new IC designs each year, while we work dozens.” More SoC tapeouts mean more opportunities for Synapse Design teams to improve its products and workflow. “This provides us and our customers with a tremendous advantage over the typically small design services houses,” he sums up.

The scope of the design work Synapse Design offers varies depending on its clients and their specific needs. When big companies such as AMD, Broadcom, IBM, and Hewlett Packard are reportedly laying off skilled workers, it’s safe to assume that Synapse Design will be trying to sign them up.

“Large companies are susceptible to recessions,” says Bagalkotkar. “Our mission is to offer flexibility and adaptability to our clients.” Typically, while slashing their design teams, large companies can’t simply walk away from an existing business that provides the lion’s share of revenue. Further, he says, “They don’t want to get a black eye from their customers.”

As he puts it, Synapse Design typically asks clients about their problems and intentions, then makes recommendations. After an agreement is signed, Synapse Design’s team parachutes in and closely works with its clients so that “they can still design new products while wrapping out their business.”

Synapse Design 2.0Synapse Design now wants to take its business further, because it often sees missed opportunities for its clients.

For example, some of Synapse Design’s clients could have easily added the third or fourth products to expand their businesses, but they often walk away from those potential opportunities because they think they no longer have the bandwidth to continue their designs.

He says, “All we are asking our clients is to let us develop those third and fourth products. We’ll take the risks of developing those new products. But if these newly designed products do well on the market, we’d like to be in a position to share profit with our clients.”

Will Synapse Design’s clients accept such a proposal? The transformation from being a “subcontractor” to a fully-fledged partner is easier said than done. Under Synapse Design’s proposal laid out by him, his clients will still remain in full control of their brands, marketing, and sales.

Struggling Japanese consumer electronics companies, such as Sony Corp., for example, might be ideal candidates. Sony, under pressure to winnow down its product portfolio and design teams, still needs to come up with the next whiz-bang products. Synapse Design believes it can contribute, either by helping the company design next-generation products or work to develop a new model, such as a subscription-based consumer electronics hardware business.

But as Bagalkotkar acknowledges, without Sony knowing who Synapse Design is and the miracles it has wrought, Synapse Design won’t have a fighting chance to knock on Sony’s door. That’s why Synapse Design has come out of the closet and begun talking.

One of the most difficult lessons to learn for an engineering services company is to specialize. We started out as a company that did embedded systems development. We stated it that way because we didn't want to miss work in any number of vertical applications. When our CEO pushed us into wireless devices as a specialty there was a lot of pushback from the engineers because we felt like we would be required to turn away work other than that. Instead what we found was that we got more work in that specialty as well as others and that we had more opportunity for reuse of IP because the projects were more closely related.

That situation really helps in terms of developing internal IP. The first customer in a vertical helps create the IP, but successive ones allow you to generalize it effectively. Eventually it can be developed to the point where it could become a turnkey product.

I agree, developing an IP with a vertically oriented company is the best option and off course the IP developer should not charge customer for the extra development needed to make the vertical application in a horizontal product.

But beyond financial development of an IP in collaboration with a vertically oriented company is crucial because then the IP has an opportunity to be used in a product. Selling IP for the first time is most crucial and the usage of your partner customer will become a very useful and convincing case study for future potential customers

Also in area like semiconductor it is very difficult to define the feature list, performance requriement of an IP without help of a customer. Hence it is always better to have a customer as a partner during IP development

What I found the best potential for IP development was with a vertically-oriented company, one that planned on using the developed IP for a very specific application. That generally leads to the least chance of conflicting business plans. The remaining conflict, however, is the extra development effort to turn that targeted vertical application into a horizontal product. It is unfair to do that on the customer's time, but that extra effort eats into the project margin. This has to be a conscious and dedicated effort by the contractor.

The business model will see a big success if the ASIC design services company can target system companies for their custom SoC development. But the issue is this will need deep domain expertise which typically the design services company lacking

Co development of IP in right sharing mode depends heavily on who is the partner. If the partner has capability of developing the IP itself then it is very tough for service provider to persue customer for right sharing. But if the customer does not have the capability then it becomes easier.

For example if an SoC company is customer of ASIC design services company then it will tough for the service company to share the right. But things may change if the customer is a system company who does not have any SoC design team in house.

@LarryM99, thanks for sharing your own experience. Pulling off miracles on sometimes impossible situations, I am sure, would not come cheap. however, I, too, see the potential conflict -- as you elaborated in your comment. Being a subcontractor, you can focus on your client's spec. But being a "partner" means that you have your own agenda to satisfy too. Let's see how this will work out.

I ran an embedded systems division of a services company back in the last big tech expansion. We worked strictly for fee, and we were not cheap. We also had a nearly 100% success rate on very cutting-edge products (we built a tablet computer for a spinoff from Xerox in the mid-1990's). Many of our competitors were sharing equity with their customers in the hope of cashing in, and my comment to them was generally "I hope it works out for you".

My problem with that model is that it complicates things. IP negotiations rarely are easy, and if the contractor does not bring significant IP of their own to the table then they have to explain to a customer why they should pay twice for a design that they end up not owning outright. If the contractor does want to develop IP of their own, they have to allocate resources to develop and maintain that IP out of an internal IR&D budget. That can be deceptively expensive and problematic.

I also have a philosophic concern. When I am building a system to the client's specification I can concentrate on what best serves their needs. If I am trying to mold it into something that I might be able to reuse for future clients then I am trying to serve two masters, and one or both will suffer.